First Principles in Spectrum Regulation

As I expected, the FCC rejected open access for the TV spectrum being recalled in 2009, merely throwing a bone to some equipment makers and setting up an auction that will only profit the monopolies.

What was most startling to me was the naked corporatism with which this was defended. It reminded me that, before the next election, we need to find some First Principles, based on Internet values, to guide future regulatory activities.

1. The goal of spectrum regulation is to maximize use of the resource.
2. The goal of spectrum regulation is not to maximize any license holder’s financial return.
3. The goal of spectrum regulation is not to maximize the government’s financial return.

These principles were, as I expected, systematically ignored. They were willfully flouted. Government officials actually said that, if open access were allowed, it might cut the value of spectrum now held by Verizon and AT&T, that it might cut the price the government could expect at its future auctions.

Well, duh! And what is wrong with that? Whose government is it? Is it Verizon’s government? Is it AT&T’s government? Is the government just in business to make a profit for itself?

No, it is our government. We, the people have a vital public
interest in increasing the bandwidth of our Internet connections. Yet
ever since 2001 the government has been systematically allowing that
bandwidth to be hoarded, to be constricted, to be divvied into a few
private hands from which it is sold through an eye-dropper.

Moore’s Law states that the amount of throughput available to Americans
should have been rising exponentially, throughout this decade. We know
how to run more bits through copper, through fiber, and through the
air, than ever before. Yet the amount of actual bandwidth available to
consumers, whether wired or wireless, does not go up, and its price
continues to go up.

This is ridiculous. This is absurd. More important, this is costing
America money and markets. Already the wireless market is dominated by
non-U.S. companies. Our equipment market is being lost to China, to Taiwan, to Finland for pity’s sake, while formerly-great U.S. brands like Motorola and Intel suffer. The former Bell Labs is now French!

Verizon can’t buy the rest of Verizon Wireless
because Vodafone, which 25 years ago was a joint venture between two
small equipment suppliers, is making so much money in international
markets that its financial strength is actually greater than that of
the former Bell monopoly for the eastern U.S.

Think about that a moment. Is this in anyone’s best interest? Is it
even, really, in the interest of Verizon, to have a monopoly?
Competitive players make more money, they provide more services, they
support more customers, and they dominate monopoly players. This, in
fact, was the lesson American companies were teaching in the 1990s,
when America was the competitive market, and when U.S. phone giants bought up South American and European networks
willy-nilly. But the re-monopolization of the U.S. market forced those
companies to retreat, to sell those networks, and now they’re under
siege in their own homeland, as they should be, because the market
beats monopoly every single time.

What should start taking place in 2009 is a new break-up of the U.S.
market. The time has come again to require competition, to demand
competition, and to break up the monopolies. Break up Verizon, break up
AT&T, break up Comcast. Deregulate the spectrum, re-license it
under open access rules familiar to any ISP, and watch the U.S. economy
boom again.

Or we can keep going down the Mexico road, as we’re doing now. One or two people get filthy rich, while the vast majority suffers.

We, the People, need to start running this country in our interest, in
our financial interest, and the way to start that process is to return
to First Principles in regulating Internet access.

Free the bits.